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Michael Saylor is standing firm as Strategy’s once wide premium over its Bitcoin holdings contracts. Shares of the company, formerly known as MicroStrategy, have fallen about 20% since June while Bitcoin has risen roughly 6% and hit record highs, according to Bloomberg Television.
This reversal has led critics to question the long-term value of the five-year-old crypto buy-and-hold strategy Saylor created. “I’m not really concerned,” Saylor said during a Bloomberg interview on Monday. “What happens is, the premium will expand as our leverage increases and the volatility in Bitcoin increases. When the volatility falls and our leverage falls, sometimes the premium will contract.”
Saylor transformed Strategy from an enterprise software business into a Bitcoin treasury company, creating a stock market proxy for holding crypto without owning tokens directly.Since mid‑2020, the stock has surged more than 2,600%.
For years, Strategy traded at a premium more than double the value of the Bitcoin it owned.That gap has narrowed sharply, with the company now valued at about 1.46 times the roughly $73 billion in Bitcoin it holds.
Crypto treasuries have attracted over $44 billion this year as promoters framed them as steady buyers turning coins from speculative bets into financial infrastructure. “The market is still working to digest the new business model,” Saylor said. “The Bitcoin treasury company is an idea that’s only come to the forefront in the past year or so.”
Strategy manages leverage as smaller rivals hit limits
The broader group of crypto‑holding firms is under strain. Nearly a third of publicly traded companies with Bitcoin reserves now trade below the value of their holdings. Small players are especially exposed. Their limited liquidity makes issuing new stock more expensive, and their dependence on convertible notes creates interest costs and repayment risks.
Strategy has said it will retire all of its convertible notes within four years and switch to preferred shares, which have no maturity date. Many competitors cannot match that approach because they lack size or strong credit.
“What happens when Bitcoin drops 50%?” asked Charles Edwards, founder of Capriole Investments. “Enthusiasm for treasury companies will wane, mNAVs will compress and you will have 100s of companies start to question their treasury strategy altogether.” His warning highlights how quickly investor sentiment can change if the market turns. Strategy’s plan to exit convertible notes is designed to reduce those pressures before a downturn tests its model.
New entrants launch crypto vehicles as ETFs erode Strategy’s edge
The space around Strategy has become crowded.Over the past year, influencers and politically connected figures have launched crypto vehicles through SPACs and reverse mergers.Many of these ventures lack Strategy’s trading liquidity and scale and may not survive a downturn.
“Is this market frothy? I think it is,” said Jack Mallers, co‑founder and chief executive officer of Twenty One Capital Inc., during a Bloomberg TV interview on Wednesday. “What we learned is, creating a Bitcoin treasury company is not a scarcity within itself. Anyone can register a business, attempt to go public and try to raise money to buy Bitcoin.”
Another threat comes from the rise of spot Bitcoin exchange‑traded funds. Initially, Strategy and the ETFs both gained from a post‑election rally under President Donald Trump. Now the comparison has shifted. Funds let investors get Bitcoin exposure without the risks tied to corporate governance, leverage or dilution. “Investors are momentum investors,” said Campbell Harvey, a professor at Duke University. “When the price is going up, they are buyers. When the price goes down or remains flat, there is less enthusiasm.”
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